Consumer confusion prompts 22% increase in vehicle finance complaints to CFPB in 2020

Consumer confusion around loan modification programs and repossession moratoria prompted an increase in auto finance complaints with the Consumer Financial Protection Bureau in 2020, as compared with the previous two years. The Bureau published its 2020 Consumer Response Annual Report on March 24, detailing 9,500 auto loan and lease complaints. Overall, vehicle loan complaints increased 22% compared with the prior two years’ monthly averages. Auto lenders responded to 570 complaints per month in 2020, up from 450 per month in 2019, and 470 per month in 2018. The uptick in complaints may partly be due to the end of COVID-era credit reporting suspensions, as well as consumer confusion, Kelly Lipinski, member at McGlinchey , told Auto Finance News . She noted these complaints are expected to continue in 2021. Vehicle finance complaints are projected to increase in 2021 as payment deferral programs and holds on repossessions end, Chuck Dodge, partner at Hudson Cook , told AFN . “When the lockdowns and stimulus payments end, there will have to be a reckoning for these accounts that are unpaid,” he said. “[Repossession] is not the result the finance company wants … but they have to manage the financial loss.” The CFPB is also likely to take more aggressive action on enforcement and debt collection practices under President Joe Biden’s administration, and this could also lead to an increase in complaints. “Probably next year's report, we will see more specificity, maybe some greater volume of egregious activity, as companies start to ramp things up,” Lipinski said. In 2020, 83% of auto finance complaints were related to vehicle loans, and 17% to leases. Problems related to managing a loan or lease yielded 33% of the complaints, a 17% increase from 2019 and 2018 averages. Consumers also complained of issues in getting a loan, problems with their credit score, and problems at the end of the loan or lease. COVID-related stay-at-home orders and dealership closures posed challenges to consumers trying to return cars on time, prompting some lenders to provide extensions, according to the Bureau. Complaints that described consumers’ struggle to pay their car loans also increased in 2020 amid the pandemic. Responding to complaints from consumers who were denied flexible repayment options, some auto lenders stated they would grant monthly extensions on an account-by-account basis. Auto also made up about 4% of the 82,700 debt collection complaints last year. The Bureau saw a 10% year-over-year increase in the number of debt collection complaints, and referred 16% more of those complaints to companies than the previous year, potentially reflecting a “more engaged CFPB on debt collection issues,” Lipinski said. “The fact that the CFPB referred more than the increase in the number [of complaints] that have been coming in suggests the CFPB … felt the need to protect consumers in a greater manner or obtain greater information from the companies,” Lipinski added, noting that COVID-19 may have been a factor. Meanwhile, credit and consumer reporting complaint volume rose 105% YoY with 319,000 complaints. The Bureau responded to 23,400 complaints per month, up from 11,400 monthly in 2019. Auto Finance Risk Summit, the premier event for risk and compliance in auto finance, returns May 11-12, 2021 as a virtual experience. The virtual experience will offer the quality networking and education of past events, all through an online platform. To learn more about the 2021 event and register, visit www.AutoFinanceRiskSummit.com .

Consumer confusion prompts 22% increase in vehicle finance complaints to CFPB in 2020

Complaints will likely continue to rise as loan modification programs end

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Consumer confusion prompts 22% increase in vehicle finance complaints to CFPB in 2020

Complaints will likely continue to rise as loan modification programs end

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Watch: GM Financial turns to artificial intelligence to enhance customer experience

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